Generali to hike stake and acquire control in both insurance JVs with Future Group

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Eight months after the government notified a liberalised FDI regime by allowing foreign investors to acquire up to 74 percent in the insurance sector, Italian insurance behemoth Generali is doubling down on its India investments and has moved to bolster its footprint.

Generali has struck twin deals with the debt-ridden Kishore Biyani-led Future Group and agreed to acquire a controlling stake in both the insurance joint ventures between both parties.

The insurance giant will pick up a 25 percent stake owned by the Future Group in Future Generali India Insurance for a cash consideration of around Rs 1,253 crores, plus an additional consideration that is linked to the date of the closing of the transaction. The deal was disclosed by Future Enterprises in a late evening intimation to the stock exchanges on January 26 and is subject to regulatory approvals and other customary conditions between the parties.

Generali has also acquired an option to buy out the Future Group’s remaining interest in Future Generali India Insurance, directly or through a nominee, at an agreed valuation subject to applicable regulatory approvals.

Currently, Future Enterprises holds a combined stake of 49.91 percent in Future Generali India Insurance. Its stake will come down to 24.91 percent after the sale of stake to Generali. Consequently, the shareholding of the Italian firm will go up to the maximum permissible limit of 74 percent.

Generali had earlier received an approval from the Competition Commission of India to purchase a 16 percent stake held by Industrial Investment Trust Limited in the life insurance joint venture, Future Generali India Life Insurance. It has also agreed to invest up to Rs 330 crores in tranches in the firm to fund its growth plans. Pursuant to the stake purchase and fund infusion, Generali will become the majority shareholder in Future Generali India Life Insurance.

According to the official announcement, Future Enterprises has received offers from potential buyers for its remaining 24.91 percent interest in Future Generali India Insurance. It is also exploring options for the sale of its 33.3 percent interest in the life insurance JV and expects to complete the exit of its holding in both ventures in a time-bound manner to meet its commitment under the one-time restructuring plan implemented under the August 6, 2020 circular issued by the RBI for cases falling under Covid-19 related stress.

Moneycontrol has learnt from multiple sources that Premji Invest, the family office of Wipro Chairman Azim Premji and private equity fund True North are amongst potential suitors for the pending residual stake sale by Future Group in the twin JV’s.  These sources did not elaborate further and spoke to Moneycontrol on the condition of anonymity.

When contacted earlier regarding their proposed interest, both Premji Invest and True North had declined to comment in response to email queries from Moneycontrol which had been unable to elicit a response from the Future Group. Premji Invest holds a minority stake in SBI General Insurance and True North holds a controlling stake in Max Bupa Health Insurance ( rebranded as Niva Bupa).

Boutique investment bank Metta Capital Advisors acted as the financial advisors and Trilegal acted as the legal advisors to Future Enterprises for the deal, the announcement added.